The government will introduce legislation tomorrow to ban foreigners from buying existing houses.
Photo: RNZ / Cole Eastham-Farrelly
That will mean overseas buyers will have to build new homes if they want to purchase property.
Housing Minister Phil Twyford said foreign buyers were pushing first home buyers and families out of the housing market.
"This government prioritises home ownership and housing affordability for all New Zealanders.
"This Bill will ensure that house prices are set by New Zealand-based buyers, not international buyers," Mr Twyford said.
People in the country on temporary visas would not be allowed to buy existing homes, while some on resident visas would have to pass new screening tests.
The rules don't apply to Australians and Mr Twyford said negotiations were ongoing with Singapore because the law change would breach an existing trade deal.
"Ultimately, if we were unable to reach agreement with Singapore on that, Singapore could be exempt through the regulations in the same way that Australia will be."
Land Information Minister Eugenie Sage said the legislation brought residential land within the category of sensitive land in the Overseas Investment Act.
"It will mean, for practical purposes, that foreign buyers will not be able to buy residential property unless they are either increasing the number of residences and then selling them or converting the land to another use."
They would need to be able to show that it would wider benefits to the country, she said.
A condensed select committee process will be held next year before the bill is passed into law.